Melbourne median house price rises to $903,859 over December quarter: Domain Group report

Melbourne house prices have hit another record high, with new figures showing the city’s median has pushed past $900,000.

Experts say the housing market remains resilient and still has considerable momentum despite warnings prices will cool in 2018.

Melbourne’s median shot up 3.2 per cent to $903,859 in the December quarter, according to the Domain Group’s latest State of the Market report, released on Thursday. Prices have risen every quarter for nearly five and a half years.

House prices in Melbourne have risen for 21 consecutive quarters. Photo: Vince Caligiuri

Median house prices in capital cities

DECEMBER 2017

SEPTEMBER 2017

DECEMBER 2016

QUARTER CHANGE

ANNUAL CHANGE

Sydney

$1,179,519

$1,173,741

$1,133,852

0.5%

4%

Melbourne

$903,859

$875,819

$812,398

3.2%

11.3%

Brisbane

$548,918

$552,398

$546,972

-0.6%

0.4%

Adelaide

$522,815

$518,037

$505,000

0.9%

3.5%

Canberra

$753,516

$717,302

$694,850

5%

8.4%

Perth

$557,567

$554,875

$571,864

0.5%

-2.5%

Hobart

$443,521

$403,201

$378,088

10%

17.3%

Darwin

$565,696

$580,951

$610,668

-2.6%

-7.4%

National

$813,024

$802,123

$773,993

1.4%

5%

Source: Domain Group House Price Report, December 2017

After growth slowed to 0.4 per cent in the September quarter, some industry observers said it was a sign of weakening confidence in the housing market. But Market Economics managing director Stephen Koukoulas said the latest figures showed the sector was remarkably resilient.

“In these quarterly figures, there’s not a lot of evidence of a cooling in house price growth,” Mr Koukoulas said, adding that he expected softer price gains.

My hunch is we will see prices fall, but not by much.Stephen Koukoulas

“Even though there has been a bit of a tightening in credit for investors, in terms of the amount that is lent and interest-only loans, it doesn’t appear to have had a significant impact in Melbourne.”

“This has been supported by strong population growth which is still outpacing new supply despite a ramp up in housing construction.”

Melbourne was again a strong performer compared to most other capital cities, with only Hobart and Canberra posting higher growth.

Sydney clearance rates have been trending down since mid year. Photo: Steven Woodburn

Sydney’s median house price, $1,179,519, increased by 0.5 per cent over the quarter and 4 per cent over the year.

Mr Bloxham said Sydney was getting less support from international and domestic migration compared with Melbourne. “A cooling in investor interest has also been more apparent in the Sydney market.”

The gap between house prices in Melbourne and the harbour city continues to narrow. Over the latest quarter the difference was reduced to $276,000, the lowest in three years.

Domain Group data scientist Nicola Powell said Melbourne’s most affordable regions — the west, north west and south east — had recorded the strongest price growth off the back of heightened first-home buyer activity.

Melbourne median house prices by region

REGIONS

DECEMBER 2017

SEPTEMBER 2017

DECEMBER 2016

QUARTER CHANGE

ANNUAL CHANGE

Inner

$1,290,000

$1,290,000

$1,220,000

0%

5.7%

Inner East

$1,550,000

$1,535,000

$1,439,400

1%

7.7%

Inner South

$1,386,250

$1,336,500

$1,285,000

3.7%

7.9%

North East

$745,000

$698,500

$645,000

6.7%

15.5%

North West

$642,000

$582,000

$540,000

10.4%

19%

Outer East

$827,000

$795,000

$738,750

4%

11.9%

South East

$660,000

$620,000

$590,000

6.5%

11.9%

West

$610,000

$565,000

$520,000

8%

17.3%

Mornington Peninsula

$715,000

$645,000

$620,000

10.9%

15.3%

Source: Domain Group State of the Market report, December

Dr Powell said loans to first-home buyers, likely enticed into the market by the state government’s stamp duty concessions and first-home owner grants, were at levels not seen since 2009.

“Demand at the entry level has been ignited which is helping to drive growth at the lower end of the market,” Dr Powell said.

Experts remain divided about what is in store for Melbourne’s property market in 2018. Some economists forecast house price growth to ease but remain positive while others predict prices will fall.

“My hunch is we will see prices fall, but not by much,” Mr Koukoulas said. “My guess is a 3 to 5 per cent fall through the course of 2018.”

Mr Bloxham said HSBC expected the market to see some pull back. “We see Melbourne housing price growth slowing from 11 per cent in 2017 to 7 to 9 per cent in 2018, which is still a decent clip.”